________________________________________
Investment Personal Statement
Revised: November 9, 2024
________________________________________
Current Situation:
•Male, Age 55: Annual earnings of $225,000, including bonus
•Female, Age 52: Annual earnings of $115,000, including bonus
•Daughter, Age 17: Attending private high school ($65,000/year)
•Son, Age 14: Attending private high school ($25,000/year)
•Net Worth: $5.1 million
•Retirement Funds: $2.7 million - only $85k is tax free Roth![:-(]( "Sad")
•529 Plans: $325,000
•Personal Stock: $720,000
•Home Equity (Primary and Vacation): $1.5 million
•Lifetime Wealth Ratio: 0.974
Goals:
Our primary objective is financial independence by June 2034, with a target inflation-adjusted annual income equivalent to $250,000 in today’s dollars to support a comfortable retirement. This income will cover lifestyle needs, including travel, healthcare, long-term care, and estate planning. By retirement, we aim to reach a retirement account balance of $6.8 million, which should generate approximately $340,000 annually for 30 years, adjusted for inflation. Our stretch goal is to build an investment portfolio capable of generating a sustainable annual income of $350,000. These goals assume stable income and employment continuity until retirement.
Social Security Strategy:
As part of our retirement income plan, we will incorporate Social Security benefits to further support our financial independence. We view Social Security as a reliable income foundation, reducing the pressure on our portfolio to provide all our retirement needs.
•Optimizing Timing: We plan to delay Social Security benefits until full retirement age (67) or possibly later, as delaying increases the monthly benefit amount. This approach maximizes our lifelong income and serves as a safeguard against longevity risk.
•Social Security as a Safety Net: Social Security will cover essential expenses, allowing us to use our portfolio for discretionary spending, inflation adjustments, and unexpected expenses.
•Portfolio Withdrawal Adjustments: With Social Security providing a base level of income, we can maintain a more conservative withdrawal rate from our investment portfolio, especially in the early years of retirement, enabling longer portfolio longevity.
Savings Goals:
•With a strong foundation of existing savings, continue saving at least 15% of annual income to maintain growth while addressing current needs.
•Maximize contributions to eligible tax-advantaged retirement accounts to enhance tax efficiency.
Investment Strategy:
1.Passive, Diversified Investment Approach: Following Bogle’s philosophy, our strategy focuses on low-cost, broad-market index funds, particularly the S&P 500, with some exposure to bonds and international equities for balanced growth and reduced market reliance.
oCore Allocation: Targeting an 80/20 or 70/30 equities-to-bonds split, with an increased bond allocation as we near retirement.
oInternational Diversification: A small allocation (10-20%) to international equities to diversify risk and capture global growth.
2.Tax Efficiency: Emphasis on tax-advantaged accounts to reduce tax impact and boost after-tax returns.
3.Steady Growth Strategy: A “ride-the-wave” approach keeps us invested in the S&P 500 for long-term growth, with portfolio adjustments only for significant, unusual market events.
4.Regular, Simplified Rebalancing: Annual rebalancing to maintain our target allocation, adjusting for substantial portfolio changes, life events, or specific market conditions. This ensures disciplined investing without over-management.
5.Annual Review and Tracking: Each year, review core metrics to stay on track:
oNet Worth
oTotal Portfolio Returns
oLifetime Wealth Ratio (lifetime income/net worth)
Home Ownership:
•Use home equity loans sparingly, limited to home improvements or debt consolidation.
•Aim to pay off the mortgage by retirement, reassessing periodically against potential investment returns (e.g., retaining our 2.75% mortgage may be preferable if investments return 10%).
Spending:
•Monitor spending to ensure alignment with financial goals, allowing flexibility for higher expenses during our children’s high school years.
•Restrict credit use to mortgages, emergencies, and convenience, avoiding debt for discretionary purchases like vehicles or vacations.
Emergency Fund:
•Maintain an emergency fund covering six months of expenses.
•Have available a $300,000 HELOC as a secondary reserve, provided we maintain a minimum of $600,000 in non-retirement investments as a buffer for repayment if needed.
Asset Allocation:
•Core Investment: Diversified across U.S. equities, international equities, and fixed income to balance growth and stability.
oTarget Allocation: Starting with an 80/20 equities-to-bonds split, adjusting to a 70/30 allocation as retirement nears.
•Rebalancing: Annual rebalancing to maintain the target allocation, avoiding reactionary adjustments.
Inflation Adjustments:
•Adjust annual income withdrawals in retirement by the CPI inflation rate each year to keep purchasing power in line with cost-of-living increases.
Expense Monitoring:
•Conduct an annual review of expense ratios, fund fees, and any other costs to minimize fees and enhance net returns.
Changes and Review:
Any significant adjustments to this investment plan will require a three-month waiting period, maintaining focus on long-term objectives and avoiding reactions to temporary market fluctuations.
Signed:
[Name Redacted]
________________________________________
Investment Personal Statement
Revised: November 9, 2024
________________________________________
Current Situation:
•Male, Age 55: Annual earnings of $225,000, including bonus
•Female, Age 52: Annual earnings of $115,000, including bonus
•Daughter, Age 17: Attending private high school ($65,000/year)
•Son, Age 14: Attending private high school ($25,000/year)
•Net Worth: $5.1 million
•Retirement Funds: $2.7 million - only $85k is tax free Roth
•529 Plans: $325,000
•Personal Stock: $720,000
•Home Equity (Primary and Vacation): $1.5 million
•Lifetime Wealth Ratio: 0.974
Goals:
Our primary objective is financial independence by June 2034, with a target inflation-adjusted annual income equivalent to $250,000 in today’s dollars to support a comfortable retirement. This income will cover lifestyle needs, including travel, healthcare, long-term care, and estate planning. By retirement, we aim to reach a retirement account balance of $6.8 million, which should generate approximately $340,000 annually for 30 years, adjusted for inflation. Our stretch goal is to build an investment portfolio capable of generating a sustainable annual income of $350,000. These goals assume stable income and employment continuity until retirement.
Social Security Strategy:
As part of our retirement income plan, we will incorporate Social Security benefits to further support our financial independence. We view Social Security as a reliable income foundation, reducing the pressure on our portfolio to provide all our retirement needs.
•Optimizing Timing: We plan to delay Social Security benefits until full retirement age (67) or possibly later, as delaying increases the monthly benefit amount. This approach maximizes our lifelong income and serves as a safeguard against longevity risk.
•Social Security as a Safety Net: Social Security will cover essential expenses, allowing us to use our portfolio for discretionary spending, inflation adjustments, and unexpected expenses.
•Portfolio Withdrawal Adjustments: With Social Security providing a base level of income, we can maintain a more conservative withdrawal rate from our investment portfolio, especially in the early years of retirement, enabling longer portfolio longevity.
Savings Goals:
•With a strong foundation of existing savings, continue saving at least 15% of annual income to maintain growth while addressing current needs.
•Maximize contributions to eligible tax-advantaged retirement accounts to enhance tax efficiency.
Investment Strategy:
1.Passive, Diversified Investment Approach: Following Bogle’s philosophy, our strategy focuses on low-cost, broad-market index funds, particularly the S&P 500, with some exposure to bonds and international equities for balanced growth and reduced market reliance.
oCore Allocation: Targeting an 80/20 or 70/30 equities-to-bonds split, with an increased bond allocation as we near retirement.
oInternational Diversification: A small allocation (10-20%) to international equities to diversify risk and capture global growth.
2.Tax Efficiency: Emphasis on tax-advantaged accounts to reduce tax impact and boost after-tax returns.
3.Steady Growth Strategy: A “ride-the-wave” approach keeps us invested in the S&P 500 for long-term growth, with portfolio adjustments only for significant, unusual market events.
4.Regular, Simplified Rebalancing: Annual rebalancing to maintain our target allocation, adjusting for substantial portfolio changes, life events, or specific market conditions. This ensures disciplined investing without over-management.
5.Annual Review and Tracking: Each year, review core metrics to stay on track:
oNet Worth
oTotal Portfolio Returns
oLifetime Wealth Ratio (lifetime income/net worth)
Home Ownership:
•Use home equity loans sparingly, limited to home improvements or debt consolidation.
•Aim to pay off the mortgage by retirement, reassessing periodically against potential investment returns (e.g., retaining our 2.75% mortgage may be preferable if investments return 10%).
Spending:
•Monitor spending to ensure alignment with financial goals, allowing flexibility for higher expenses during our children’s high school years.
•Restrict credit use to mortgages, emergencies, and convenience, avoiding debt for discretionary purchases like vehicles or vacations.
Emergency Fund:
•Maintain an emergency fund covering six months of expenses.
•Have available a $300,000 HELOC as a secondary reserve, provided we maintain a minimum of $600,000 in non-retirement investments as a buffer for repayment if needed.
Asset Allocation:
•Core Investment: Diversified across U.S. equities, international equities, and fixed income to balance growth and stability.
oTarget Allocation: Starting with an 80/20 equities-to-bonds split, adjusting to a 70/30 allocation as retirement nears.
•Rebalancing: Annual rebalancing to maintain the target allocation, avoiding reactionary adjustments.
Inflation Adjustments:
•Adjust annual income withdrawals in retirement by the CPI inflation rate each year to keep purchasing power in line with cost-of-living increases.
Expense Monitoring:
•Conduct an annual review of expense ratios, fund fees, and any other costs to minimize fees and enhance net returns.
Changes and Review:
Any significant adjustments to this investment plan will require a three-month waiting period, maintaining focus on long-term objectives and avoiding reactions to temporary market fluctuations.
Signed:
[Name Redacted]
________________________________________
Statistics: Posted by starling — Sat Nov 09, 2024 9:39 pm — Replies 7 — Views 308